Amidst the euphoria of the recent deal to receive $15 billion upfront payment from India for Nigeria’s crude oil, the Federal Government, was on Tuesday enjoined to speed the process of passing the Petroleum Industry Bill (PIB) into law, without which no one will touch the nation’s offshore oil blocks, especially with insecurity onshore.
According to Dolapo Oni, Africa-focused Energy Analyst at Ecobank Group, who was reacting to news of the Indian deal on his twitter handle, noted that “one of the things that can make these India/China trips (by the Federal Government) more meaningful is the Incorporation of the Joint Ventures and Passage of PIB.”
Senate President Bukola Saraki, last week assured that the National Assembly is resolved to pass the PIB in piecemeal thereby ensuring that the contentious portions do not prevent the entire bill from becoming law. He promised that the first part will be passed by December.
The Federal Ministry of Petroleum Resources had on Monday announced the Federal Government’s plan to sign the Memorandum of Understanding (MoU) for a $15 billion oil deal with India in December.
The deal is expected to facilitate investments by India in the nation’s Oil and Gas sector and specifically in areas such as Term contract, participation of Indian companies in the refining sector, oil and gas marketing, upstream ventures, the development of gas infrastructure and in the training of oil and gas personnel in Nigeria.
Another key issue, Oni noted, will be how to immune the deal from political pressures and upheavals that follow change in government, just he urged government to remember that while the deals brings money in advance, “there will be months of shipping to fulfill.”
It is therefore pertinent, he believes, for Nigeria to ensure that disruptions to production as experienced this year do not reoccur.
The ultimate aim of government, he believes, “should be to increase domestic consumption of our oil and gas, invest in infrastructure and diversify,” rather than spending the money on salaries, wasteful government spending, or defending the Naira, which the nation would regret afterwards.
While deal sounds good, Oni called for more details, especially on the volume of crude and duration of the contracts, which he expects would come when the deal is sealed in December.
“This deal is particularly important for us going forward. There’s so much oil coming on the market that will be looking for markets to go.
In Africa alone new oil fields expected to add over 0.5 million barrels per day are coming on stream in Angola, Ghana, Congo (and) Nigeria before the end of 2017.
“Russia is setting new records of oil output almost every other month even as it looks to push OPEC to freeze its output to support prices.
Over in Latin America, Argentina has introduced new & more competitive laws to support foreign ownership of oil assets, especially shale.
“Argentina is pushing for shale drilling to start this year, with hopes of pushing production of shale oil & gas up over the next few years.
“Russia is about to buy a refinery in India? Yes! Almost done. Russia is also planning a $25 billion gas pipeline to India.
“So, if you know these things and you know these countries are also targeting India (your main customer) what should be your response?
Oni also expects that the Federal Government would have made juicy offers to the Indians in the area of discounts to market prices, access to Oil Mining Licences (OMLs) and Joint Ventures, stressing that in spite of these, Nigeria has more to gain from the deal.
“The largest refinery in the world is in India – Jamnagar refinery. India is a world leader in refining construction. We can learn a lot.
“India’s economy and energy demand are growing at a much faster rate than China. They need oil & gas to fuel their growth. We need to sell.
“This India deal is more likely than the Chinese. China is plugged into Saudi Arabia, Russia & Angola for oil. They buy less oil from us.
“Maybe I should stress this more. India needs to build up its oil storage. They have less than 9 billion barrels of oil reserves.
“While other countries can afford to buy refineries in India, build pipelines to India or offer other opportunities, India has always expressed its love for Nigerian crude grades, but we were stuck with our middlemen and crony trading arrangements. This is a shift in tact.
“It is a partnership we should cultivate. Indonesia is another country that likes our crude that we should be talking to.” He tweeted.
Source: News Express.
*Photo shows Petroleum Minister of State Ibe Kachikwu.